Chang's Way

While many restaurants and restaurant chains are getting killed by the economic downturn, P.F. Chang's is up, up, up according to Slate's Dan Gross:

P.F. Chang's China Bistro,
whose two restaurant chains--P.F. Chang's and Pei Wei Asian Diner--are
staples of upscale malls and mixed-use developments, said that
same-store sales fell a bit but profits produced at its 350 outlets rose
38 percent from the first quarter of 2008. Operating margins--the holy
grail of any business--at P.F. Chang's 190 stores rose from 12.8 percent
to 14 percent, largely because of "incremental operational improvement
opportunities." The stock has doubled since November.

The reason: mainstream mall appeal, affordable offerings, and
especially good management - based heavily on the principles of
"kaizen" or continuous improvement pioneered by Toyota and other
Japanese manufacturers.

P.F. Chang's made it to $1 billion in sales by taking
cues from successful Asian businesses. Now by focusing on process
improvement rather than helter-skelter growth, it seems to be doing so
again. Continuous improvement, the philosophy pioneered by Japanese
companies such as Toyota in which managers and workers relentlessly
seek out small modifications that add up to big profits, seems to be
the recipe for success in 2009.

Low-end standardized service jobs make up more than 40 percent of
all U.S. employment. Imagine if more restaurants and service companies
started to act like P.F. Changs. Innovation and rising productivity are
the underpinnings of higher wages, and happy and engaged employees the
key to more continuous improvement.

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